Increasing demand for gas storage space highlighted by record demand from power generation this summer and near-record working gas levels this season has prompted Westport, CT-based NGS Investments LLC to propose three new high-deliverability gas storage projects.

The projects include the 20 Bcf Tres Palacios salt dome in Matagorda County, TX, the 16 Bcf Leaf River salt dome storage project in Smith County, MS and the 6 Bcf Windy Hill bedded salt gas storage project in Morgan County, CO, which was recently approved by FERC.

The independent storage company currently has open seasons running to test market interest in both Tres Palacios and Leaf River. Tres Palacios will make use of two existing salt caverns, previously leached and designed for natural gas storage by a Texas Brine subsidiary. The use of existing caverns will enable Tres Palacios to quickly become operational in early 2008 with 2.5 Bcf/d of deliverability and 1.5 Bcf/d of injection capability.

Tres Palacios also will retain rights to additional caverns in the dome for any future expansions. As much as 20 Bcf of additional working gas capacity potentially could be added, said Laura Luce, president of the Tres Palacios project and a principal at NGS.

The Tres Palacios pipeline and header system will include interconnections with Tennessee Gas (Zone 0), Houston Pipe Line, Enterprise Channel, KM Tejas, Natural Gas Pipeline of America (South Texas), Texas Eastern Transmission (South Texas), Gulf South Pipeline (Zone 1), Enterprise Valero, Florida Gas Transmission (Zone 1), Transco (Zone 2) and Crosstex Pipeline.

Tres Palacios also is situated between several proposed liquefied natural gas import terminals, including Calhoun LNG and Freeport LNG. The project includes a header system that crosses over 8 Bcf/d of downstream pipeline capacity. The open season for storage space at the facility ends on Dec. 1. NGS said the Tres Palacios project will be the only Texas independent storage operation fully regulated by the FERC. NGS plans to file an application with the Federal Energy Regulatory Commission (FERC) in December to operate the facility under Section 7(c) of the Natural Gas Act with market-based rates.

The open season on Leaf River capacity ends Dec. 8. Leaf River initially would have 16 Bcf of working gas capacity but could be expanded to 32 Bcf. It is expected to have 1.5 Bcf/d of deliverability and 1 Bcf/d of injection capacity. The Leaf River pipeline and header system will include interconnections with Tennessee Gas (Zone 1), Destin Pipeline, Dauphin Island, Transco (Zone 4), Southern Natural Gas; Crosstex’s Mississippi System and the Gulf South Mississippi Expansion. NGS plans to file an application with FERC for the project early next year.

NGS purchased Windy Hill from Chevron about a month ago and is preparing to launch an open season soon for that project, which would be Colorado’s first high-deliverability salt storage operation. FERC approved Windy Hill in May. When fully developed it would provide 6 Bcf of working gas capacity and 400 MMcf/d of deliverability under market-based rates (see Daily GPI, May 23 and Nov. 9, 2005).

NGS is a newly formed private company managed by industry veterans with experience in gas storage development, including some former Sempra Energy gas storage officials who helped develop the Bluewater storage field in Michigan among other projects. For more details on the open seasons contact Laura Luce at (203) 557-4264, or lluce@ngsinvestments.com.

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